Correlation Between Matahari Putra and Metrodata Electronics
Can any of the company-specific risk be diversified away by investing in both Matahari Putra and Metrodata Electronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Matahari Putra and Metrodata Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matahari Putra Prima and Metrodata Electronics Tbk, you can compare the effects of market volatilities on Matahari Putra and Metrodata Electronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Matahari Putra with a short position of Metrodata Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Putra and Metrodata Electronics.
Diversification Opportunities for Matahari Putra and Metrodata Electronics
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matahari and Metrodata is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Putra Prima and Metrodata Electronics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrodata Electronics Tbk and Matahari Putra is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Matahari Putra Prima are associated (or correlated) with Metrodata Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrodata Electronics Tbk has no effect on the direction of Matahari Putra i.e., Matahari Putra and Metrodata Electronics go up and down completely randomly.
Pair Corralation between Matahari Putra and Metrodata Electronics
Assuming the 90 days trading horizon Matahari Putra Prima is expected to under-perform the Metrodata Electronics. In addition to that, Matahari Putra is 8.5 times more volatile than Metrodata Electronics Tbk. It trades about -0.04 of its total potential returns per unit of risk. Metrodata Electronics Tbk is currently generating about -0.03 per unit of volatility. If you would invest 63,000 in Metrodata Electronics Tbk on August 27, 2024 and sell it today you would lose (500.00) from holding Metrodata Electronics Tbk or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matahari Putra Prima vs. Metrodata Electronics Tbk
Performance |
| Timeline |
| Matahari Putra Prima |
| Metrodata Electronics Tbk |
Matahari Putra and Metrodata Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matahari Putra and Metrodata Electronics
The main advantage of trading using opposite Matahari Putra and Metrodata Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Putra position performs unexpectedly, Metrodata Electronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Metrodata Electronics will offset losses from the drop in Metrodata Electronics' long position.The idea behind Matahari Putra Prima and Metrodata Electronics Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Metrodata Electronics vs. Multipolar Tbk | Metrodata Electronics vs. Astra Graphia Tbk | Metrodata Electronics vs. Matahari Putra Prima | Metrodata Electronics vs. Ramayana Lestari Sentosa |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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